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Los Angeles City's Hyperion Treatment Plant Digester Gas Utilization Project (DGUP) SCAP Energy Management Committee - February 27, 2014.

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Presentation on theme: "Los Angeles City's Hyperion Treatment Plant Digester Gas Utilization Project (DGUP) SCAP Energy Management Committee - February 27, 2014."— Presentation transcript:

1 Los Angeles City's Hyperion Treatment Plant Digester Gas Utilization Project (DGUP) SCAP Energy Management Committee - February 27, 2014

2 Digester Gas Wastewater Primary & Secondary Treatment Solids Treatment Class A Biosolids Natural Gas LADWP SGS 1/2 Steam HTP Boundary Reuse Ocean Kern / TIRE 2 EXISTING USE OF DIGESTER GAS SINCE 1995 HYPERION TREATMENT PLANT – EXISTING USE OF DIGESTER GAS SINCE 1995

3 Current generation and Utilization of Digas 3

4 DGUP: PROJECT HISTORY YearDescription 1995 Scattergood-Hyperion Electrical Energy Exchange Agreement: 7-MSCFD digester gas (renewable energy, 15.5MW) DWP SGS electricity HTP at fixed rate... Has high DG associated emissions 2001Steam Agreement SGS: Technical obsolescence, cooling water issues, market issues SHARE:DWP financed/operated cogeneration project at HTP using digester gas 2009DWP: Notice to Terminate agreements in 5 years 2010SHARE: Abandoned by DWP (flaring, Costs: $8M/yr +$30M/yr) Alternatives considered / financing constraints 2011 DGUP RFP: Best use of HTP digester gas considering technical performance and cost with alternate delivery. BOS willing to consider alternative solutions GFE:Complicated issues resolved 2012Contract Selection: Cogeneration as best value (Constellation Energy) CEQA/EIR:November Current Contract Structure:addresses ownership, financing, DWP 2014DWP: Agreement Extended to Contract Approved: January 2014 Next 3 yrsCommercial Operation: Before December 31,

5 5 Why DGUP? Source: EIA There are underlying economic factors

6 Cost of Electricity from the GRID 21MW-hr x 1000kw/MW x 24hr x 365d/yr x $0.18/kw-hr = $33,000,000/yr Each $0.01/kw-hr increase impact HTP by $1,800,000/yr HTP Energy Costs (of annual budget): 10% (now) +30% (2017) 6 DWP ENERGY RATE TRENDS (HTP CURRENTLY PAYS $0.05/KWH)

7 CALIFORNIA COASTLINE PROJECT 7 HTP Location:Complex Environmental Situation

8 Demand has gone down Use has improved Constraints will change in the future 8 HTP-elect load week average demand HYPERION: ELECTRICAL DEMAND LAST 6 YEARS IN , I PREDICTED A SIGNIFICANTLY DIFFERENT TREND

9 9 Many Stakeholder-specific Project Drivers City was Open to Alternative solutions

10 10 proposals with 2 general approaches: Bio-methane Ameresco BioFuels Southern California Gas Co-generation Ameresco Constellation DTE DCO PROPOSALS (IN RESPONSE TO 2011 RFP) NORESCO Southern California Gas UTS 10

11 Select Best Value Project Final Evaluation Preliminary Evaluation PROPOSAL EVALUATION PROCESS RFP SECTION 9 A multi-step, comprehensive process...Evaluated both cost and non-cost factors Proposals Shortlisted Projects Initial Screening (GFE) Ameresco(1&2) BioFuels Constellation DCO DTE NORESCO Southern California Gas (1&2) UTS BioFuels So.Cal.Gas DTE So.Cal.Gas 3/11 8/12 11/12 10/12 Constellation DCO NORESCO Ameresco (2) UTS 1.Constellation 2.NORESCO 3.DCO 11

12 DGUP PROJECT - SUMMARY Selection addresses the plants electricity and steam needs Utilizes 100% of digester gas, and Generates up to 29 MW Generates all the steam required for solids treatment Uses existing resources Addressed environmental concerns: air emissions and health risks noise no flaring of gas, except during emergencies Capability of islanded operation during emergencies Slight export of power, significantly reduces potential demand charges Potential growth (digas, electricity, steam) and flexibility (fuel) Alternative Delivery – time was main factor Overall: Technical + Cost Best Value Project 12

13 13 HTP-elect load DGUP: SYSTEM CAPACITY VS. HTP DEMAND Guarantees System will meet demand > 95% of time.

14 CONSTELLATION 14 Summary Two Mars 100 units w/ HRSG, w DF, w/STG ~25 MW normal output Future: 1 Mars 14

15 15 HTP – ERB FROM SOUTH – VIEW, FROM BING Gas Treatment Gas Treatment NSY CoGen Area DGUP PROJECT HYPERION TREATMENT PLANT

16 DGUP: Demolition will be an early task 16

17 Complete Demo Complete Design Start Testing Commercial Operation & Final Acceptance City Starts Training City Starts Operation Complete CEQA/EIR NTP DWP/BOS Agreement SHAREDGUP RFPSelection 17 HTP DIGESTER GAS UTILIZATION PROJECT OVERALL TIMELINE (ESTIMATED 2/13/2014)

18 Digester Gas Utilization Project Site Questions 18

19 HTP One of largest plants in the world Located in El Segundo... Next to Dockweiler, butterflys, airport Reliably treats water to high standards Treats and manages bio-solids for beneficial use WWTP by-product, Digester Gas, renewable energy resource at SGS DWP Provides 20 MW (on average) DWP Provides 35,000 lb/hr steam Provide extremely reliable electricity and steam source Energy Costs: $8 to 9 Million/year T-3 19

20 HTP Digester Gas – Some Reference Numbers Gas Production Rate:7 MSCFD The generation of the digester gas is expected to increase by 30% over the next 5 years. Energy Content:1.5 x btu/yr Potential Renewable Value: $tbd Current HTP Budget: $77-80 M/yr Current HTP Electric: $5.2M/yr will go to +$30M/yr w/ no project Current HTP Steam: $2.9M will go to $tbd M w/ no project Renewable Electricity 15 MW now 18 MW or depending on the math 20 T-3

21 Why DGUP? LADWP Economics... Starting about CHART HTP electricity from LADWP (about 20.5 MW) $0.05/kwh now > $0.19/kwh w/o DGUP after 2016 About $ /kwh w/DGUP Because of Regulatory Constraints, SGS is not an option after 2016 Existing agreements expire January 31, 2015 December 31, T-5, 6

22 HTP DIGESTER GAS – OPTIONS CONSIDERED Option 1:Power Generation - Use digas to self-generate HTP steam and electricity. Option 2:Sell Digas as is - Use digas for plant steam, sell excess digas as a green energy source. Purchase electricity from DWP. Option 3:Clean Digas/Sell Biomethane - Use digas for plant steam, purify excess digas to pipeline quality, sell as a renewable energy source to make electricity. Purchase electricity from DWP. Option 4:Clean Digas/Store Biomethane - Same as Option 3, but store gas underground to maximize value. Purchase electricity from DWP. Option 5:Do Nothing - Use digas for plant steam. Flare excess digas. Purchase electricity from DWP. 22 T-9

23 WHAT DID RFP SEEK? Reliable source of electricity Reliable source of steam Minimum Environmental impact Small Carbon footprint (renewable fuel) Make best beneficial use of biogas, reduced flaring Schedule that works Affordable Fiscal Impact, considering: – Capital cost – O&M cost It is unrealistic to get an alternative project operational by January 2015 extension 23 USE HTP'S DIGESTER GAS TO EITHER: (1) PROVIDE STEAM FOR HTP DIGESTERS AND ELECTRICAL ENERGY FOR CURRENT AND FUTURE PLANT OPERATIONS OR (2) PROVIDE A MONETARY BENEFIT TO OFFSET THE PURCHASE OF ELECTRICITY FOR HTP PLANT OPERATIONS DGUP RFP AUTHORIZED JANUARY 2011 T-9

24 Technical 7.2 MSCFD digester gas Very significant energy resource Low risk, proven technology 25 MW for HTP 50-kpph reliable source of steam Sustainability Low environmental impact Renewable Energy: currently 15 MW w/ No project 0 MW w/project (includes steam) 24 MW Schedule SGS option ends December 2016 Startup: October 2016 w/NTP in February Alternative Delivery Design & Construction Startup/Testing Operation - 10 years operation by Contractor Best Financial Value to City Performance based contract NPV determination over 20 years Current HTP Budget: $77-80M/yr Current Electric/Steam: $8.2 M/yr No project, Electric/Steam:$35 M/yr DGUP, Electric/Steam:$21 M/yr DGUP OVERVIEW 24

25 HTP DIGAS OPTIONS HTP 1/3 gas to boilers 2/3 gas flared Total emissions: ??? $28M direct electrical charge Upgrades to Flares and boiler required SGS $3.6M to maintain Estimated $15M to generate Xxx emissions Taller stack, remoter location 25 DROP ?

26 ELECTRICAL Considerations – Construction cost (uncertainty) Reliability (relative to today) Technical risk (future) Rate Risk (not negotiated yet) Financial risk (next 20 years) What benefits BOS, not DWP Options (premise: any of these are acceptable, pending detailed analysis) A.Connect to Grid (reliability a wash, high cost, best chance for bucket 1) B.Connect to MSY (reliability -, high cost, difficult to implement, good chance for bucket 1) C.Connect to NSY (reliability +, low cost, bucket 1 uncertainty) 26

27 HTP Digester Gas Utilization Project Project Variables Electric cost Natural gas costs– Chart? Electrical growth – Chart? Digas production – volume and quality Capital costs Emissions City Policies Time Constraints Real World Issues Politics Reliability / Risk 27 Ill pause for a moment so you can let this information sink in.

28 PROPOSAL EVALUATION PROCESS Followed process described in RFP §9 Evaluation Teams Included 16 subject-area specialists 11 different functional areas, including 3 different Bureaus Over 400 years of combined experience [eval. team] + more on support staff Management and Consultant review Equal, Unbiased Assessment of all proposals 28

29 EVALUATION CRITERIA RFP SECTION 9 1.Technical Teaming Experience & Financing Terms & Conditions Technology Project Implementation Project Operation 2.Financial 20-year net present value analysis RFP Defines Best Value 29

30 Constraints: schedule dictated by external circumstances limited available funding possible lack of specialized technical expertise BUREAU decided DBOOT would serve the best interests to realize: Significantly lower operational costs for steam and electricity for HTP compared to no project, Improved beneficial use of a renewable energy source compared to current use, and Lower emissions associated with digester gas flaring as compared to no project. Shifts substantial technical and financial RISK to Contractor by tying payments to performance requirements..... But Later had to change ownership to address external requirements But this ultimately proved beneficial DGUP Motivation (Best Interests of the City) 30

31 HTP Digester Gas Utilization Project Purpose of Project Develop the best beneficial use of digester gas generated at HTP to meet its energy needs by January 2015, considering: Financing Demolition Design Construction Operation (as integrated into HTP) 31


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